I have a trust that inherited a rental property which was sold this year. When I enter the rental information I check the box that says it was sold. I enter the sale information, which results in a loss. The loss is showing up in part II of the 4797 and gets characterized as an ordinary loss, not as a capital loss. If I uncheck the box that it was sold this year I can enter the sale as a capital asset along with stock sales. It then gets treated as a long term capital loss but the rental gets depreciated all year. How do I get it to stop the depreciation when the property is sold and treat the sale as a capital loss?
